iscover
iscover 
The latest SMSF quarterly statistical report released by the Australian Taxation Office (ATO) revealed that SMSF asset allocation for residential property increased by 7.5 per cent between December 2023 and December 2024. This saw the total climb from $54.2 billion to $58.3 billion.
The increasing popularity of SMSF investing revealed a golden opportunity for brokers. However, Liam Carmody, general manager at Palise Property, said that brokers are often neglecting this form of lending, especially when it comes to commercial property.
However, he also said that the number of brokers who can service SMSF loans is on the rise.
“Having a broker that has either done it themself or has lots of clients who are doing it successfully will give you that assurance you are working with a great broker. We are starting to see more brokers understand it and enter the space as it’s a huge potential market for investors to continue investing in the current environment where the higher interest rates and cost of living pressures have dampened investor activity,” said Carmody.
He continued by saying that brokers are crucial in assisting borrowers with SMSF loans. The expertise provided has been important in Carmody’s own investment journey.
With some brokers choosing not to offer these services, there is a real opportunity to capitalise on a growing demand for SMSF investment.
“[Brokers are] crucial in understanding what lenders are out there as it’s a relatively new space with lenders coming in and out. All offer different products, so knowing what types of loans and to what LVR is very important in ensuring you’re maximising your options,” Carmody said.
“Some lenders are offering up to 80 per cent LVR for commercial property which is great for those investors wanting to leverage further and look to secure a bigger and better asset.
“Brokers will also be aware of what new lenders are coming into the SMSF lending environment and what associated fees and rates they have.”
It’s also important to understand if the loans are principal and interest or just interest and if they have offset accounts, said Carmody.
“In SMSF you cannot pull equity out of a property so offset accounts can be a great added bonus to reduce your interest costs as the rates are typically much higher and also to keep your cash in your SMSF more liquid for either buffers or future investment opportunities,” Carmody said.
Reflecting on his own journey into SMSF, Carmody began by speaking to his accountant and “reviewed our overall strategy and goals.”
“We wanted to ensure we have a comfortable retirement and have the ability to travel, be with grandchildren and live a comfortable lifestyle. Investing through SMSF can be highly tax effective and most people overlook this,” he said.
“Even though it takes more time and patience, the longer-term benefits are huge. The SMSF portfolio will be our fallback in retirement and then outside of SMSF we are continuing to generate income through property, employment and development projects to then further our passive income in the short term which will allow us to take steps away from the workplace in the short to medium term if we decide to.”
Providing tips for those looking to enter this form of investment, Carmody urged borrowers to be clear on the time frame and outcome they’re after.
“Are you starting out with residential or is commercial a better option? Understand that cash flow comes in two forms, from the property and also from your contributions. Like everything in property, it takes time, but understanding your goals will ensure you are best placed to set yourself up for success in retirement,” Carmody said.
“It’s also important to understand your current position and if investing in SMSF is the right move for you now. Typically, $200k would be the absolute minimum balance you want to start with to secure a good quality residential asset and also be able to manage cash flow. Having closer to $300k in your SMSF would be a good starting point to look at investing in commercial property. A good broker will be able to assess your ability to fund and service a residential or commercial investment in your SMSF.”
[Related: SMSF isn’t complex if you have the tools and understanding]
